Treasury chief presses Congress to raise debt limit as deadline nears

Speaking to the Bipartisan Policy Center in Washington on Monday, Treasury Secretary Jacob J. Lew warned Congress about the dangers of waiting until the last minute to raise the federal debt ceiling.

Speaking to the Bipartisan Policy Center in Washington on Monday, Treasury Secretary Jacob J. Lew warned Congress about the dangers of waiting until the last minute to raise the federal debt ceiling. (Chip Somodevilla / Getty Images)

With most economists projecting that economic growth will accelerate this year, Lew said Washington should avoid the type of "self-inflicted wounds" experienced last year. Those included the partial government shutdown last fall, which reduced fourth-quarter growth, and a face-off over the debt limit at the same time that unsettled financial markets.

As part of the deal that reopened the government in October, Congress suspended the $16.7-trillion debt limit until Friday.

At that point, Treasury officials will begin a series of accounting maneuvers that it calls extraordinary measures to allow for continued borrowing.

But unlike in the past, those measures will buy only a few weeks because they are taking place at the beginning of the year, when the government is starting to pay out tax refunds, Lew said.

Those measures will expire by the end of the month, Lew has estimated, meaning the federal government would face default on some of its bills if the debt limit isn't raised before then.

His estimate is in line with one by the Bipartisan Policy Center, which closely tracks the debt limit and projects the Treasury measures would run out between late February and mid-March -- with it more likely to happen earlier than later.

"Let me repeat: In just a matter of days, the temporary suspension of the debt limit will end, and the Treasury Department will have to start using extraordinary measures so the government can continue to meet its obligations," Lew said.

"Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government," he said.

Congressional Republican leaders said they don't want to default on the debt but also don't want to raise the debt limit without spending cuts.

President Obama has said he would not negotiate on raising the debt limit because it is the responsibility of lawmakers to borrow to pay for spending they already have authorized.

House Republicans discussed their options at a retreat last week. On Sunday, House Majority Leader Eric Cantor (R-Va.), said he was confident the federal government would not default.

"What I believe is we can work something out," he said on CBS' "Face the Nation."

"And I'm hopeful that the president and the Senate will work with us in the House to actually do what has typically been done with debt ceilings, which is making some progress toward addressing the spending problem in Washington, making some progress toward trying to grow the economy around the debt ceiling," Cantor said.

But Lew on Monday reiterated Obama's stance that "neither he nor any other president should have to pay a ransom so the United States can pay its bills. "

"The truth is, the longer we wait, the greater the risks become," Lew said. "Whether it is the economic recovery, the financial markets or the dependability of Social Security payments and military salaries — these are not things to put at risk. "